Microsoft Revenues Up, Profits Down

Microsoft on Thursday announced record revenues of $10.5 billion for the quarter ended Dec. 31, 2001, but the company posted lower profits than it did for the year-ago period.

Microsoft officials attributed the revenues, a 19 percent increase over the $8.54 billion of the same three-month period in 2002, to growth in both consumer and corporate demand.

"Consumer and corporate demand for PCs continued to exceed our expectations and resulted in solid double-digit revenue growth for Windows XP and Office products," John Connors, chief financial officer at Microsoft, said in a statement. "The overall corporate IT market also began to show signs of a recovery, with increased demand for both desktop and server products."

Microsoft's earnings were down from $1.87 billion in its second quarter last year to $1.48 billion this year. The results included a stock-based compensation expense of $2.17 billion after taxes, more than half of which went to the completion of the employee Stock Option Transfer Program.

With the Office 2003 launch coming during the second financial quarter (Microsoft starts its fiscal year in July), Microsoft's Information Worker revenue grew 27 percent over the previous year.